The global shipping industry has had a tough couple of years, struggling with a slump in trade, high insurance premiums, overcapacity issues and price wars between shipping lines.

In contrast, the Middle East’s shipping industry is positioning itself for future growth and investing in larger ports equipped to handle the latest mega ships. Several regional port operators and shipping companies are performing well on stock markets and posting rising quarterly profits. Increasing trade flows between emerging markets in Africa and Asia mean the Middle East is well-positioned to become a global shipping hub between some of the world’s fastest growing economies.

The picture is not entirely rosy, however. Weak global economic growth and difficulty in raising finance will constrain the industry’s ambitions. The lack of finance is doing little to deter shipping lines from investing in large vessels with more capacity as they hope to capitalise on greater economies of scale. This could push smaller shipping firms out of the market, and encourage more mergers and acquisitions.

The push towards larger ships has driven investment in port expansions in the Middle East, with Abu Dhabi’s Port Khalifa, Dubai’s Jebel Ali port and Qatar’s New Doha Port now under construction. The success of the region’s shipping industry will ultimately rest on there being enough demand and trade volume passing through the Middle East. Otherwise the sector will face overcapacity problems again.